The Federal Court has heard advisers urged Magnis Energy Technologies, now Ryzon Materials, to cut ties with its troubled US battery gigafactory as cash problems mounted, with chairman Frank Poullas warned the project risked dragging the company down.
According to The Australian, ASIC has alleged Magnis and Poullas engaged in misleading and deceptive conduct and breached continuous disclosure rules by failing to reveal the deteriorating state of Imperium3 New York (iM3NY). Both deny the claims.
Evidence heard included advice from then chief executive David Taylor to divest and recover funds from the project, and from battery expert Mike Driscol, who told the company’s CFO to place iM3NY into bankruptcy, saying: “This is not my first rodeo.”
Court documents show Magnis told investors in August 2022 the factory was in “commercial production” and “fully funded,” despite internal warnings that machines were producing unsaleable output and that the project needed about $US53m to meet targets.
Cash was expected to run out by April 2023, but problems were disclosed only in November 2023.
ASIC also pointed to internal messages from Poullas expressing concern, including telling iM3NY chair Shailesh Upreti fundraising was “killing our share price” and later saying, “This time is the first time I’m worried.”
The company ultimately lost its stake in iM3NY when the venture entered bankruptcy.
Source: The Australian.
